creditors

It Can Happen Here: The Bank Confiscation Scheme for US and UK Depositors

By Ellen Brown

Global Research, March 29, 2013

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Confiscating the customer deposits in Cyprus banks, it seems, was not a one-off, desperate idea of a few Eurozone “troika” officials scrambling to salvage their balance sheets. A joint paper by the US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland (discussed earlier here); and that the result will be to deliver clear title to the banks of depositor funds.  

New Zealand has a similar directive, discussed in my last articlehere, indicating that this isn’t just an emergency measure for troubled Eurozone countries. New Zealand’s Voxy reported on March 19th:

The National Government [is] pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts . . . .

Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.

Can They Do That?

Although few depositors realize it, legally the bank owns the depositor’s funds as soon as they are put in the bank. Our money becomes the bank’s, and we become unsecured creditors holding IOUs or promises to pay. (See here and here.) But until now the bank has been obligated to pay the money back on demand in the form of cash. Under the FDIC-BOE plan, our IOUs will be converted into “bank equity.”  The bank will get the money and we will get stock in the bank. With any luck we may be able to sell the stock to someone else, but when and at what price? Most people keep a deposit account so they can have ready cash to pay the bills.

The 15-page FDIC-BOE document is called “Resolving Globally Active, Systemically Important, Financial Institutions.”  It begins by explaining that the 2008 banking crisis has made it clear that some other way besides taxpayer bailouts is needed to maintain “financial stability.” Evidently anticipating that the next financial collapse will be on a grander scale than either the taxpayers or Congress is willing to underwrite, the authors state: (more…)

Have The Russians Already Quietly Withdrawn All Their Cash From Cyprus?

Submitted by Tyler Durden on 03/25/2013

Yesterday, we first reported on something very disturbing (at least to Cyprus’ citizens): despite the closed banks (which will mostly reopen tomorrow, while the two biggest soon to be liquidated banks Laiki and BoC will be shuttered until Thursday) and the capital controls, the local financial system has been leaking cash. Lots and lots of cash.

Alas, we did not have much granularity or details on who or where these illegal transfers were conducted with. Today, courtesy of a follow up by Reuters, we do.

The result, at least for Europe, is quite scary because let’s recall that the primary political purpose of destroying the Cyprus financial system was simply to punish and humiliate Russian billionaire oligarchs who held tens of billions in “unsecured” deposits with the island nation’s two biggest banks.

As it turns out, these same oligrachs may have used the one week hiatus period of total chaos in the banking system to transfer the bulk of the cash they had deposited with one of the two main Cypriot banks, in the process making the whole punitive point of collapsing the Cyprus financial system entirely moot.

From Reuters:

While ordinary Cypriots queued at ATM machines to withdraw a few hundred euros as credit card transactions stopped, other depositors used an array of techniques to access their money.

No one knows exactly how much money has left Cyprus’ banks, or where it has gone. The two banks at the centre of the crisis – Cyprus Popular Bank, also known as Laiki, and Bank of Cyprus – have units in London which remained open throughout the week and placed no limits on withdrawalsBank of Cyprus also owns 80 percent of Russia’s Uniastrum Bank, which put no restrictions on withdrawals in Russia. Russians were among Cypriot banks’ largest depositors.

So while one could not withdraw from Bank of Cyprus or Laiki, one could withdraw without limitations from subsidiary and OpCo banks, and other affiliates? (more…)

Cyprus rejects bailout deal leaving eurozone facing fresh crisis

Cash-strapped nation expected to seek funding lifeline from Russia after dramatic no vote in country’s parliament

 in Nicosia and 
The GuardianTuesday 19 March 2013 21.09 GMT

Protesters outside Cypriot parliament

A Cypriot protester outside the country’s parliament after hearing news that MPs had rejected the bailout deal. Photograph: Filip Singer/EPA
 

The Cypriot parliament has thrown out a controversial plan to skim €5.8bn from savers’ bank accounts, in a move that risks plunging the eurozone into a fresh crisis and heightens expectations that the cash-strapped nation will seek a funding lifeline from Russia.

Cyprus has just 24 hours to find a solution to its funding gap before its banks are due to reopen following the dramatic no vote on Tuesday night, which failed to support a hastily renegotiated change to the original deal.

With the crisis escalating, an RAF flight carrying €1m (£850,000) in low denomination notes set off for Cyprus to provide cash for 3,000 British service personnel based on the Mediterranean island.

The banks have been shut since Friday and electronic transactions halted, although cash machines are still working and the Ministry of Defence said the euros were being flown in as “contingency measure”.

About 2,000 of the military staff, who typically serve out 18- to 24-month postings to the island, have their salaries paid into local accounts. The MoD said it was “approaching personnel to ask if they want their March, and future months’ salaries paid into UK bank accounts, rather than Cypriot accounts”.

Even before the no vote was announced, the euro had already slumped to its lowest level in four months after speculation that the Cypriot finance minister, Michalis Sarris, had resigned.

Sarris, who was in Moscow ahead of his meeting with his Russian counterpart on Wednesday, was forced to text-message Reuters to deny the quick-spreading rumours that he had quit.

There were also reports that the banking arm of the Russian energy company Gazprom might pump cash into Laiki, Cyprus’s second largest bank, which is in urgent need of a capital injection. Gazprom officials insisted this was not being planned. (more…)

Insane EU: Bank depositors in panic as they pay for Cyprus €10bn bailout

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Posted by  in Economy

Bank depositors will have to finance 60% of  the 10-billion-euro bailout for Cyprus agreed between European Union and International Monetary Fund in Brussels in the early morning hours of Saturday. Eurozone ministers force depositors at Cypriot banks to pay a one time levy to raise  6 billion euros. The so-called “emergency solidarity contribution” will force savers to see their bank deposits undergo a 6.7%-9% “haircut”,  while bondholders will not suffer any losses at all.

Savers with more than 100,000 euro in bank deposits will pay a 9.9% levy.

Savers with less than 100,000 euro will pay 6.75% contribution to the bailout.

There is no minimum deposit capital cap.

The decision will not affect bank deposits in Cypriot banks in the Greek bank network (Cuprus state RIK TV).

Tax on bank deposits interest is expected to be 20-25%. (more…)

The dark side of investment agreements

Movements around the world have put the spotlight on bailouts and tax evasion that have enriched the 1% at the expense of the 99% but this is only part of the picture. This popular video animation exposes how international investment agreements are also at the heart of an international economic system that is enriching a small corporate elite at the public expense. This video shows how:
•corporate lawsuits against governments have risen by almost 1200% since 1990 •Argentina’s legal bill for fighting corporate lawsuits has come to US$ 912 million, equivalent to the annual average salary of 140,000 teachers or 75,000 public hospital doctors
• corporate lawyers, based mainly in the UK and US, are earning around $800 dollars an hour encouraging corporations to sue governments

 

 

 

The EU Crisis Pocket Guide

2012 edition

6 November 2012

A useful pocket guide on how a crisis made in Wall Street was made worse by EU policies, how it has enriched the 1% to the detriment of the 99%, and outlining some possible solutions that prioritise people and the environment above corporate profits.

The EU Crisis Pocket Guide has been updated in English (November 2012)

Now also in Italian!

Click here for the Spanish version

Contents

  • How a private debt crisis was turned into a public debt crisis and an excuse for austerity
  • The way the rich and bankers benefited while the vast majority lost out
  • The devastating social consequences of austerity
  • The European Union’s response to the crisis: more austerity, more privatisation, less democracy
  • Map of resistance across the EU in 2012
  • Ten alternatives put forward by civil society groups to put people and the environment before corporate greed
  • Resources for further information

  (more…)

Athens: Barking strays protest the Troika …in the name of all Greeks (picts)

The representatives of Greece’s lenders had a rather unpleasant encounter on Sunday: they came face to face with the famous Athens strays. Three, four doggies had taken position outside the finance ministry as the Troika moved to meet minister Yiannis Stournaras and check the pulse of Greece’s austerity progress.

troika strays

 Duel in Athens: Troikans against strays

Following some mysterious inner voice, the strays had gathered outside the ministry. They formed a chain of protest – ‘representative’ – so to say – for the millions of Greeks suffering from the harsh austerity and the never ending taxes.

Video: all the pictures

embedded by Embedded Video

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The confrontation ended with loud barking and the Troikans rushing to the building, holding their bags in defending position.